EU votes to limit carbon tax on airlines

4 Apr 2014 by Clement Huang

Amid growing concerns from international airlines outside of Europe, the EU has voted to abandon its plans to impose carbon tax on non-EU airlines.

The European Emissions Trading Scheme (ETS) was originally launched in 2005 in an effort to control climate change, and remains the world’s largest emission trading programme globally. Aviation emissions were included back in 2012 (deemed as “Phase II” of the programme), with lawmakers seeking to tax airlines on their CO2 emissions accordingly.

The move sparked debates as well as adverse reactions from countries outside of Europe, such as Russia, China and the US (see here), which argued that the EU did not have the jurisdiction to regulate flights that were outside of European airspace. China had even threatened to cancel its aircraft orders as a form of retaliation against the system (see here). As a result, both Airbus and Boeing (see here) have voiced their concerns with regards to the proposed scheme.

However, based on the results of a ballot, the European Parliament has decided to scale back and only impose a carbon-emissions charge on EU-based airlines for journeys within the confines of the European airspace.

The original proposed scheme was to impose charges onto all flights in and out of Europe in their entirety. However, with concessions that have been made, tax will only be charged on EU-based carriers while they are flying within designated European airspace. Upon leaving EU territories, these carriers will not be charged further. 

According to the International Civil Aviation Organisation (ICAO), airspace is defined by the skies above a country's land territory and 12 miles of territorial sea from its coastlines. The EU has warned that it still intends to impose the broader plan in 2017, should there still be a lack of a global initiative by the ICAO.

Click here to read our feature about the ETS, which appeared in the Business Traveller Asia-Pacific January/February 2012 issue.

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Clement Huang

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